Retail sales see surprise dip in January

According to data just released by the Office for National Statistics (ONS), the volume of retail sales fell by 0.3% in January 2017, compared to December 2016. Earlier forecasts had been for a rise of around 0.9%, and this significant departure from expectations is, says ONS senior statistician Kate Davies, part of “the first signs of a fall in the underlying trend since December 2013.

“We have seen falls in month-on-month seasonally adjusted retail sales, both in conventional stores and online, and the evidence suggests that increased prices in fuel and food are significant factors in this slowdown.”

Inflation data released earlier this week by the ONS showed inflation had risen to its highest level since mid-2014, and analysts believe rising costs, coupled with a stagnation in wages, have made consumers cautious about spending. The signs, they say, are that “the rest of the year is shaping up to be tough on the high street.”

Patrick Munden, Global Head of Retail and Marketing at e-commerce specialist Salmon, told GC: “The latest ONS figures offer a sobering read for vendors. Unsurprisingly, online sales increased by 10.1% Year-on-Year, although it might come as a shock that e-commerce transactions fell by 7.2% Month-on Month. It’s often the case that, as the Black Friday and Christmas peak period comes to a close, consumers tend to be more cautious with their spending. Yet what the figures clearly highlight is that retailers can no longer simply expect a strong online offering to guide their business through low sales peaks.

“Understanding that innovation and creativity are both central is the only way retail leaders will see the successes and opportunities on offer. As technology such as Zero UI (Google Home and Amazon Echo) and Programmatic Commerce (IoT-connected devices ordering products automatically for the consumer) take hold, retailers must embrace entrepreneurial ideas that enable them to grow. Doing so will be the only way to thrive in an industry so dependent on its customer.”